Patent Portfolios and Paying Patent Lawyers

The current issue (Jan 14-20, 2006) of the Economist has an article (sorry paid subscription required) called "Innovation and its enemies" covering the 2005 USPTO patent statistics, the problems in the patent space (at a high level), and references the GPLv3 work at the end of the article.  A couple of numbers caught my eye. 

Moreover, Microsoft (with around 750 patents) failed to break into the top ten—but with over 13,000 applications pending, it seems bound to get there soon. For now, the firm ranks 18th.

That's sort of staggering really.  The rule of thumb is a patent can cost US$15,000 by the time you've paid the patent attorneys and filed the paper work, and then you wait (for on the order of three years now according to the article).  Microsoft has filed as many as 3000 patents in previous years according to various public reports, and one might imagine they filed as many a couple of years ago, for these 750 to appear this year. 

So what I want to know is when do the patent attorneys get paid?  If it's upon filing, but the patent doesn't survive, does the filing company get money back from the attorneys because the attorneys didn't file a strong enough patent, or do their homework deeply enough?

As an ex-patriot Canadian, I was taught that the Canadian legal system differed from its U.S. counterpart in that (i.) a Canadian lawyer only gets their fee (no percent of the damages) so the pressure to drive up the damages doesn't come from the lawyers, and (ii.) in Canada the "loser" pays which tends to cut down on gratuitous litigation.  So the way lawyers are rewarded seems at first to have an effect on how the legal system gets backlogged (or not), or at least it removes the lawyer's bias from the system.   

With the patent system flooded (the number quoted in the article is that there are 500,000 patents in the backlog), the patent lawyers probably can't do their homework deeply enough.  But there's no economic disincentive to file differently to try to improve the system. 

It will be fascinating to see how many lawyers begin to get involved in the Open Patent Review initiative started by IBM. Will the aggressive participants become the better patent lawyers offering their clients demonstrably better patent filings?  The right sort of competition from lawyers could have a fascinating impact on the improving quality of patents. 

Here's the top ten list for the year (from the USPTO website):

Top 10 Private Sector Patent Recipients for the 2005 Calendar Year.

Preliminary Rank in 2005	Preliminary # Patents in 2005	Organization	(Final Rank in 2004)	(Final Number of Patents in 2004)
1	2,941	International Business Machines Corporation	(1)	(3,248)
2	1,828	Canon Kabushiki Kaisha	(3)	(1,805)
3	1,797 *	Hewlett-Packard Development Company, L.P. *	(4)	(1,775)
4	1,688	Matsushita Electric Industrial Co., Ltd.	(2)	(1,934)
5	1,641	Samsung Electronics Co., Ltd.	(6)	(1,604)
6	1,561	Micron Technology, Inc	(5)	(1,601)
7	1,549	Intel Corporation	(7)	(1,513)
8	1,271	Hitachi, Ltd	(8)	(1,893)
9	1,258	Toshiba Corporation	(9)	(1,311)
10	1,154	Fujitsu Limited	(11)	(1,296)

* Calendar year counts for 2005 for Hewlett-Packard Development Company,  L.P. include seven patents issued to Hewlett-Packard Company.

Comments

[Ian]

I think you probably meant to use the term "expatriate Canadian" as opposed to "ex-patriot Canadian."